Beacons not yet lighting up retail

Analysts suggested this week that beacon usage in retail is over-hyped and retailers still have a significant distance to travel before this technology becomes a central part of the general shopping experience.

Published: 01:37:51 on the 8th May 2015Author: Ben Sillitoe

Share this post

Industry analysts have this week poured cold water on the notion that beacon technology is set to have an imminent impact on how retailers engage with their customers, suggesting that "so many things need to happen" before these devices can bring significant value to both businesses and consumers.

Adam Silverman, principal analyst at Forrester, and Miya Knights, senior research analyst at IDC Retail Insights, both agreed the technology has potential when it comes to improving customer engagement when linked to location-based mobile communication, but its immediate impact would appear to have been over-hyped.

Silverman and Knights were joined by Steve Rowen, managing partner at RSR Research, as part of a panel debate assessing the most pertinent issues currently affecting the retail landscape. The general consensus of the panel, which took place at tech company NetSuite's SuiteWorld conference in San Jose, California, was that much deeper retailer structural change surrounding inventory management and back-end systems is required before some of the new technology emerging in the market will gain traction.

A shift in thinking is required, explained Knights, who said retailers need to view shopping from their customers' perspective and it should never be about "throwing technology at a problem".

The recent emergence of distributed order management systems was deemed by the panel as a positive development in retail – and one that can help meet the demands of consumers who want to be able to shop seamlessly across devices and purchase/pick up/return items when and where they choose, free from complications.

It was suggested that systemic structural change of this nature can pave the way for the introduction of other technologies, such as beacons, that can thrive when retailers have a better understanding of their inventories and individual customer behaviour.

"So many things need to happen for beacons to become relevant in retail," Knights added.

Forrester research found that around 70% of retailers with a mature mobile strategy are using beacons in pilot mode, and Silverman welcomed the desire within the industry to test how mobile-related technologies might be deployed in the future, but remarked "there is a lot of heavy lifting to do" before retail enterprises roll out beacons.

Commenting to Essential Retail, he said: "Where beacons are working is actually not in retail; they are working in two areas I can work out; the consumer packaged goods (CPG) and hospitality industries."

A company called Shelfbucks is putting beacons into point of purchase (POP) signage in retail stores for compliance reasons, effectively allowing CPG companies that are promoting products via POP to check whether or not a store has actually run the marketing campaign as requested. Silverman also gives the example of Starwood Hotels, which is utilising the technology to unlock hotel doors when pre-booked guests arrive at its venues, cutting out the need for people to visit a reception desk to collect a key.

"It's not actually a very customer centric experience. It's for the hotel to get payment information but for the customer it is a pain-point," noted Silverman.

"Beacons are allowing those types of organisations to understand where their customers are. In hospitality, beacons make a lot of sense."

In March Planet Retail managing director Helen Slaven told this publication that 2015 was the year the retail industry needed to work out what to do with beacons, following their recent emergence on the scene and the surrounding hype that has followed.

In the UK, companies such as House of Fraser and Ted Baker have implemented Iconeme's beacons into mannequins, allowing customers who have downloaded an app to receive push notifications and other product information on their mobiles when in close proximity to the devices, in selected stores. There have also been incidences of retailers placing beacons outside their competitors' shops, prompting mobile push notifications to customers that can effectively sabotage a sale in a rival establishment.

Beacon and mobile messaging usage is certainly a major talking point at industry exhibitions across the globe and has significant potential to strengthen brand relationships with customers; that much is clear. But as yet there remain few widescale examples of it actually improving the shopping journey for consumers.

Judging by the analysts' comments in San Jose this week, many of the retailers considering use of beacons have some core structural work to do before rolling out the location-based marketing and engagement technology that a growing number of vendors are suggesting they require.

Have your say...

Read T&C's

Post As

Comments

Bryan Amaral - CEO of Clientricity about 1 year ago

Overzealous "hype" has existed with every new technology that identifies a person, place or thing... If we believe the hype, by now we should all have a barcode tattoo on the back of our neck and an embedded RFID chip fully linked with a retinal and fingerprint database!

The magic isn't in the "identification" but in the supportable use cases that can leverage that knowledge. Personalized customer-centric use cases have generally first found their foothold in the luxury and high-touch retail segments. There are several high-value scenarios that beacons could enable today for that segment, most with a minimal amount of engineering or organizational effort (i.e. notifying a luxury department store manager on his mobile device that a top 100 customer has entered the store).

Retailers should spend more time thinking about their brand promise and customer journey and focus on what will drive traffic, conversion and ATV. If that exercise results in low friction ways to enhance that journey through location based messaging, then maybe they should consider beacons...

The one good thing about hype cycles - they lead to innovation and some of that eventually sticks.

Geoffrey Barraclough about 1 year ago

Beacons are going to be great for airports but retailers simply don't have enough customer knowledge to generate meaningful time and location specific, personalised messages. This technology has been horribly over-hyped for two years now. Enough.

Dan Parker, WiForia, the WiFi Marketing Company about 1 year ago

Great article. Good to hear a little common sense about Beacons in retail. The reality is that retailers just cannot get customers to install and run their beacons apps. Accordingly we made the decision to focus on wifi for location based services. You don't need an app, the infrastructure is already there and customers are signing up in large number from only a sticker in the store window.

Retailers' use of beacon technology to communicate with customers via their mobiles is still in its nascent stage